Wednesday, March 26, 2008

But the WSJ has revealed something I have known for some time. Some folks who work for the federal government do not have health insurance.

I have several clients who are employed by government agencies who either have no health insurance, or have a very limited benefit plan.

A few weeks ago a lady from the CDC called. She was referred by a co-worker who is also a client. Seems she had emergency surgery a few months ago and the health insurance paid less than $1000 on a $14,000 bill.

Covering the uninsured is a central issue in this year's political campaign. Yet while politicians debate how best to cover the growing ranks of the uninsured, the federal government -- by outsourcing service jobs -- quietly is adding to those numbers.

Outsourcing jobs.

To save money.

Considering it is taxpayer money, such moves are commendable.

The problem is, the contract workers are offered health care benefits that are akin to putting a patch on an old pair of jeans. Many of these workers are semi-skilled and usually do not understand how poor the benefits are . . . until they need to use them.

By then it is too late.

Under a 1965 law, called the McNamara-O'Hara Service Contract Act, most contractors with service contracts of more than $2,500 are required to pay locally prevailing wages, plus fringe benefits or the cash equivalent -- $3.16 an hour this year, under a government formula.

$3.16 per hour for fringe benefits.

That's $526 per month per employee working 40 hour weeks.

Seems adequate.

But not all contract employers offer health insurance as part of the package. If they do offer health insurance, it is usually a limited benefit plan.

By diverting all or some of the $3.16 to wages, they are able to offer employees a wage that is higher than the "prevailing market wage" and attract workers.

And some contractors don't even comply with the law, and pocket the government allowance.

"A lot of contractors are playing games," says Al Corvigno, a Smithfield, Va., consultant who trains contractors and Labor Department employees on the McNamara-O'Hara Act. He estimates that 40% of service contractors may not be providing the required benefits or cash, or paying the right amount.

No government oversight or accountability meets greed.

Yeah, I am shocked too.

In fiscal-year 2007, the Labor Department initiated more than 650 investigations under the statute and found that in 80% of those cases, the employer failed to pay proper wages or benefits or both. Employers who violate the law may be required to make cash payments to employees and may be barred from government contracts for as many as three years.

But the WSJ has revealed something I have known for some time. Some folks who work for the federal government do not have health insurance.

I have several clients who are employed by government agencies who either have no health insurance, or have a very limited benefit plan.

A few weeks ago a lady from the CDC called. She was referred by a co-worker who is also a client. Seems she had emergency surgery a few months ago and the health insurance paid less than $1000 on a $14,000 bill.

Covering the uninsured is a central issue in this year's political campaign. Yet while politicians debate how best to cover the growing ranks of the uninsured, the federal government -- by outsourcing service jobs -- quietly is adding to those numbers.

Outsourcing jobs.

To save money.

Considering it is taxpayer money, such moves are commendable.

The problem is, the contract workers are offered health care benefits that are akin to putting a patch on an old pair of jeans. Many of these workers are semi-skilled and usually do not understand how poor the benefits are . . . until they need to use them.

By then it is too late.

Under a 1965 law, called the McNamara-O'Hara Service Contract Act, most contractors with service contracts of more than $2,500 are required to pay locally prevailing wages, plus fringe benefits or the cash equivalent -- $3.16 an hour this year, under a government formula.

$3.16 per hour for fringe benefits.

That's $526 per month per employee working 40 hour weeks.

Seems adequate.

But not all contract employers offer health insurance as part of the package. If they do offer health insurance, it is usually a limited benefit plan.

By diverting all or some of the $3.16 to wages, they are able to offer employees a wage that is higher than the "prevailing market wage" and attract workers.

And some contractors don't even comply with the law, and pocket the government allowance.

"A lot of contractors are playing games," says Al Corvigno, a Smithfield, Va., consultant who trains contractors and Labor Department employees on the McNamara-O'Hara Act. He estimates that 40% of service contractors may not be providing the required benefits or cash, or paying the right amount.

No government oversight or accountability meets greed.

Yeah, I am shocked too.

In fiscal-year 2007, the Labor Department initiated more than 650 investigations under the statute and found that in 80% of those cases, the employer failed to pay proper wages or benefits or both. Employers who violate the law may be required to make cash payments to employees and may be barred from government contracts for as many as three years.